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401k Contribution Limits

Your likely going be getting calls in the next 1-2 months from mySOP people wanting to setup a new plan and push in money, or from current 401k clients wanting to make their annual contributions. Below is a quick little writeup to give them.

Pre-Tax 401k Contribution Limits

2010 – $16,500
2011 – $16,500 plus an index for inflation ($500 increments)

Pre-Tax 401K Catch Up Limits

For plan participants that reach age 50 before the calendar year is over to make additional catch up contribution limits on a pre-tax basis as shown below:

2010 – $5,500
2011 – $5,500 plus an index for inflation ($500 increments)

Employer Contribution Limits

In addition to the contribution limits appearing in the tax law, there can be employer imposed contribution limits to 401k plan.  The contribution limit for employers is set at 6% of the employee’s pre-tax compensation.

That means an employee with a total compensation package of $100,000 can contribute $16,500 in 2010 on a pre-tax basis and their employer can contribute another $6,000 for a total of $22,500.  If you’re 50 or older, then you can contribute another $5,500 pre-tax bringing the total to $28,000.